It’s but natural for people approaching their retirement age to be concerned about their financial security, with retirement benefits and pension likely to be their prime sources of income in later years. Those planning for early retirement though will have to carefully (re)consider their decision to ensure availability of adequate finances, to meet post-retirement expenses. That said, there are several ways in which people over their 50s can ensure not having to live on less than what they’re entitled to. Here are a few pointers.
• Retirement Planning
Now that there are no age restrictions on retirement, planning for retirement at the right time is mandatory. Ascertaining at what age one qualifies for full state pension is a pre-requisite. Several factors such as year of birth, gender, adequate contributions to National Insurance, employed/self-employed, etc. determine the type of pension and amount. With several imminent changes in pension policy, these factors can make a great difference.
• Boosting Pension
Full basic state pension at present is reportedly £110.15 a week for those with full NI contributions, and £176.15 for couples (one full state pension and other on reduced pension).
o Lack of sufficient NI contributions can result in reduced pensions. In such cases, paying up pending life insurance cover contributions can remedy the loss and boost pension for years to come. Considering the fact that NI contributions may simply be a few hundred pounds, when compared to higher pensions for a life time, this could prove quite rewarding.
o Opting for pension is purely based on the need for funds. Deferring pension claims by about a year can earn an interest of 10.4 % on the annual pension amount.
o It is also possible to get a bulk payment of the deferred amount, plus 2 % interest over the base rate after one year, and then receive full state pension.
• Additional Care On Annuities
While annuities are no longer mandatory to claim pension funds, they still continue to be a secure, steady source of funds for life. The main drawback, however, is that there’s no going back once an annuity has been purchased.
It is worth noting that annuity deals from the pension provider aren’t always the best. Shop around for the most rewarding annuities before opting for one.
• Pension Credits
Not everyone qualifies for pension (guaranteed or savings) credit, but this additional fund source is worth a check, and could make slight difference.
Men and women over 60 are guaranteed individual weekly earnings not less than £148.35, at least £226.50 a week for a couple.
Those over 65, with retirement savings, are entitled to a savings credit of up to £16.50 a week for singles and £20.70 a week for couples.
Reportedly, a flat-rate weekly state pension of £155 is expected to come into effect from April 2016, and the qualifying age for full state pension for both men and women is likely to reach 66 in about five years.
Making well-informed retirement decisions and, of course, judicious use of a multitude of grants and discounts (on energy, winter fuel, council taxes, home improvements, utilities, etc.) offered to seniors, not only will help ensure financial security but also aptly leverage the benefits available.
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